National Treasury 2003 Budget Vote Presentation

Strategic focus & objectives Promote economic development, good governance, social progress & rising living standards Advance economic growth & income redistribution Ensure accountable, economic, efficient & sustainable management of public finances Advocate & enforce transparency in the use of public resources

Strategic focus & objectives Support sound budgeting & financial management and the equitable division of resources between the three spheres of government Ensure that tax policy is fair & well formulated so that Government is able to raise revenue efficiently & equitably Manage Government’s financial assets & liabilities efficiently

Achievements – 2002/03 Firm foundation for growth & development –Resilient economic performance –Robust fiscal framework –Sound & efficient tax policy design – tax relief & tax-driven stimulation measures –Declining debt service costs Enhanced budgeting & financial management –Measurable objectives & output targets in 2003 ENE –Publication of 3-year strategic plans –2003 Intergovernmental Fiscal Review – reviews spending & service delivery at the provincial & local level –Stronger relationship with provincial & local government

Achievements – 2002/03 Efficient debt management –Improved international credit ratings –Broadening of international investor base –Restructuring & consolidation of domestic debt portfolio –Diversified funding instruments & improved liquidity Improved PFMA implementation –Monthly & quarterly monitoring & reporting –Steady progress in decentralised financial management Enhanced international & regional engagement –Nepad & regional policy reform –Extensive interaction with multilaterals –Implementation of the new SACU agreement

Strategic priorities 2003 – 2006 Promoting sustainable growth & development Strengthening initiatives to reduce poverty & increase job creation Enhancing budget transparency & planning Improving financial management & quality of spending Advancing procurement reform processes Reinforcing the quality of financial accounting & reporting in line with GRAP Ensuring efficient Government debt & financial asset management Deepening relations with international multilaterals on international financial policy development

Sustainable growth & development Over the next 3 years : –Formulating growth-enhancing macro policies that contribute towards investment & job creation –Maintaining a sound, but more expansionary fiscal stance –Supporting step-up in national, provincial & municipal infrastructure investment – PPPs –Gradually liberalising exchange controls –Ongoing tax policy reform incl. retirement tax reform & joint exchange control & tax amnesty

Poverty reduction & job creation Over the next 3 years : –Expanding sectoral policy capacity & monitoring service delivery progress –Increasing resources to provincial & local government to extend coverage & improve quality of basic & social services –Reviewing the provincial & local equitable share formulae – 2001 Census demographic data –Strengthening provincial & local government planning, budgeting, financial management & delivery capacity

Budget transparency & planning Over the next 3 years: –Increasing political oversight of budget process –Enhancing measurable objectives, service delivery information & output targets –Strengthening link between strategic planning, 3-year budgeting & reporting at national & provincial –Extending reporting requirements on conditional grants under Division of Revenue Act to non-financial, service delivery information

Financial management & accountability Over the next 3 years : –Implementing PFMA at national & provincial level and MFMA at local level –Extending municipal financial management reforms –Providing & managing systems for monitoring & managing expenditure –Monitoring & reporting on PFMA implementation –Roll-out of financial-management training –Completing financial management systems (BAS) implementation –Developing integrated financial management system master plan

Procurement reform processes Over the next 3 years : –Phasing in implementation of supply chain management practices –Delegating procurement authority from state tender boards to departmental procurement units –Repealing national & provincial state tender board legislation & closure of offices –Regulating & monitoring supply chain management practices –Managing transversal contracts on behalf of Government

Financial accounting & reporting Over the next 3 years : –Phasing in implementation of GRAP & migration from cash to accrual accounting – 85% of approved policies implemented by March 2006 –Finalisation of accounting policies & practices in line with GRAP – 6 critical policies finalised and circulated by July 2003 for implementation –Implementing uniform annual financial statements & reporting requirements –Facilitating implementation of internal audit framework, policies & practices

Liability & asset management Over the next 3 years: –Continuing to focus on debt cost reduction –Continuing diversification of funding instruments –Completing development of full-yield curve of inflation linked bonds –Broadening investor base in government bonds –Pursuing international credit rating upgrades –Eliminating the Net Open Forward Position –Improving cash management practices –Reviewing & implementing risk management framework –Undertaking corporate governance review of state owned enterprises

International financial engagement Over the next 3 years: –Strengthening relations with international multilaterals – IMF, World Bank, African Development Bank, G20, G24 – on international financial policy development –Boosting efforts on Nepad capital flows initiative & ongoing reform of SADC institutions –Strengthening Common Monetary Area –Completing the establishment of Financial Intelligence Centre in line with Financial Intelligence Centre Act

Organisational restructuring Achievements in 2002/03 Treasury restructuring in line with Resolution 7 – public sector transformation & restructuring 8 divisions employ 500 professional & admin staff – increasing to 750 by 2005 New organisational structure developed & senior management & key professional positions filled Refurbishment & renovation of accommodation – 40 Church Square & 240 Vermeulen Str.

Compliance with PFMA Unqualified audits ( 3 rd year running) CFO appointed Internal audit outsourced Risk management assessment completed & risk management committee established Fraud prevention plan developed Audit Committee established Piloting of procurement reforms

Effective organisational development Enhancing HR policies and systems – incl. performance management system & ETD Redesigning IT infrastructure Continuous improvement of financial manual Consolidating parliamentary services Enhancing Office of the DG (COO) Continuing implementation of affirmative action & employment equity practices

Staff Profile as at 31 March 2003 Management Employees below Management GENDER RACE

Estimates of Expenditure Operational Budget Programme VOTED BUDGET Increase/ 2002/ /04 Decrease R’000 R’000 % 1. Administration Economic planning & budget management Asset & Liability Management Financial management and systems Financial accounting and reporting TOTAL OPERATIONAL BUDGET

VOTED BUDGET Increase/ 2002/ /04 Decrease R’000 R’000 % Operational budget Provincial & local government transfers Civil and Military Pensions, Contributions to Funds and Other benefits Fiscal transfers TOTAL BUDGET Estimates of Expenditure Transfers

Programme 82003/ / /06 R’000 R’000 R’000 International transfers  Lesotho and Namibia  Contribution to HIPC initiative  African Development Bank contributions SA Revenue Service Development Bank of Southern Africa Financial and Fiscal Commission Secret Services – NIA, SASS and SAPS Financial Intelligence Centre Other TOTAL FISCAL TRANSFERS Fiscal transfers